South Korea tightens crypto exchange safeguards after Binance hack
South Korea's Financial Services Commission has told domestic crypto exchanges to hold a larger share of customer assets in cold wallets and to strengthen their defences, after a hack at Binance prompted a review of how local operators safeguard funds.
The FSC said it requested the measures at a meeting on 2 November and reaffirmed them in a clarification the following day. Attendees included the Financial Supervisory Service, the Financial Security Institute, a crypto industry association and major virtual-asset businesses. The regulator dates the Binance hack that triggered the review to 30 October.
The requests cover four areas: custody, transfers, incident response and financial buffers. Exchanges were urged to raise the proportion of assets kept offline, continuously monitor deposits and withdrawals, secure additional response staff, promptly report and share abnormal access attempts, and build additional reserves.
The meeting also examined controls over access to computer systems, approval and signing arrangements for wallet withdrawals, and administrator privileges, extending the review beyond how much is held offline to the systems and permissions used to move it.
The requests build on a custody framework adopted in 2024. Under a supervision notice that accompanied the legal framework taking effect on 19 July 2024, the custody share was set at 80% of customer crypto's defined economic value, calculated using quantities and average won conversion values over the preceding year. That 80% ratio is the 2024 standard, not a newly announced threshold, and the releases do not report exchange-by-exchange implementation.
The review follows separate supervisory activity: on 28 October, regulators began on-site inspections after Bithumb reported signs of an employee-information leak.
What it means for Pakistan: The episode is a reminder for Pakistani users of offshore exchanges that custody arrangements and withdrawal permissions, not just trading prices, decide whether funds survive an incident. South Korea's approach, raising the offline share of customer assets and tightening access controls, mirrors the custody and reserve questions Pakistan's Virtual Assets Regulatory Authority is expected to settle as it licenses virtual asset service providers under the framework set out by the State Bank and SECP.
